Monthly residential rates will rise over two years if the requests are granted under a Florida law enacted in May.
By LOUIS HAU
Published August 28, 2003
Tampa Bay area residents will soon see the cost of local residential phone service skyrocket if phone companies get rate hikes they requested Wednesday.
Verizon, the bay area's largest local phone provider, is seeking increases of up to 46 percent in its basic residential rates over the next two years. Monthly rates that now range from $10.12 to $12.10 for a single phone would increase by $2.25 in the first year and an estimated $2.36 in the second year.
Verizon and the state's other major local phone providers, Sprint and BellSouth, moved almost simultaneously Wednesday to seek approval for big rate hikes from the state Public Service Commission under a controversial new phone law that Gov. Jeb Bush signed in May.
Sprint, which provides local phone service in Citrus County and parts of Hernando and Pasco counties, is seeking basic service rate hikes of $3.23 and then $3.63 over the next two years. That will mean increases of from 60 to 90 percent for residential customers.
Basic rates do not include optional services, such as voice mail or caller I.D, or other fees and taxes.
The companies also want to increase some nonrecurring charges. For instance, Verizon is asking to raise the initial connection charge for a residential phone line by $10 to $65.
Rates for low-income customers who qualify for the state's Lifeline phone-bill subsidy program will be frozen at current levels for the next two years. The phone companies also sought steep increases for single-line business customers.
The PSC must approve or reject the requests within 90 days. If approved, the increases would go into effect immediately.
The new state rules on phone rates, which were crafted by the major phone companies, permit them to increase their base phone rates if they agree to corresponding decreases in the fees they charge long-distance providers to access their networks.
The law marked a dramatic easing in Florida's regulation of phone rates, which until recently had permitted base rates to increase 1 percentage point less than the rate of inflation.
The major phone companies argued that the changes would benefit consumers because wider profit margins for local phone services would encourage more companies to enter the market, spur competition and expand consumer choice. They also noted the law requires long-distance companies to pass along their cost savings to customers.
Consumer advocates scoffed at that, arguing long-distance rates aren't regulated so any customer savings could be short-lived.
"The whole thing is a sham," said Mike Twomey of the consumer group Florida Utility Watch. "It has nothing to do with increasing competition but was designed to protect big telephone companies."
Twomey criticized the phone companies for planning to implement their increases over the next two years, saying they had been expected to soften the impact of the rate hikes by spreading them out over three or four years.
Critics of the legislation argued that because revenue from long-distance access fees has been eroding faster than that generated from local phone service, increasing rates for local service will benefit phone companies over the long run.
"We suggest (consumers) send thank-you cards to Gov. Bush," said Bill Newton, executive director of Florida Consumer Action Network in Tampa. "We fought hard against this in the Legislature, but it was greased through."
But the phone companies stuck to their guns Wednesday, arguing that the increases would be good for their customers.
"What we're doing is moving this system away from a subsidized system to one that is market-driven, similar to the wireless market," Verizon spokesman Bob Elek said. "That's going to benefit consumers."
Last year, Bush vetoed a law similar to the one he signed this year. The big difference: Rather than make the rate hikes automatic, the new law requires approval of increases by the Public Service Commission. Supporters of the legislation said this guarantees an independent review of the requests. Critics said the PSC is likely to rubber-stamp the increases.
Still an open question is how the PSC will go about considering the requests. The commission is scheduled to meet Tuesday to consider staff recommendations on how it should go about receiving testimony.
- Information from Times files was used in this report.
What Verizon wants
- Monthly residential base rates (listed as "Verizon regulated charges" on bills) vary from $10.12 in rural areas to $12.10 for most residents in Tampa, St. Petersburg and Clearwater.
- The company proposes to increase residential base rates by $2.25 the first year and an estimated $2.36 the second.
- That would mean rate increases ranging from 38 percent to 46 percent over two years.
